US Treasury Aims To Lower FATCA Burdens.
This article popped up in my Google news feed.
The first half is a rehash of what we already know, but the last six paragraphs shed a bit of light on how FATCA will proceed. Note the comments about a higher dollar threshold for reporting requirements and the possibility of having the FFIs report to the government which in turn would report to the IRS.
Now I have heard through a friend that works for a large investment firm here in Canada that at the moment they only plan to report customers that fall under the category of non-resident status in Canada. Don’t take this as gospel because as we all know the rules can change at any time. It’s not clear what other investment firms are doing, but banks are likely to follow a stricter set of rules.
I didn’t hit a pay wall!
I remain skeptical personally. Small changes here and there, slightly higher thresholds, making it easier for banks to comply and reducing administrative burden. I personally think that this is absolutely terrible news, since the only ones lobbying with any force against FATCA are the banks themselves, and if they become passive because it is no longer an administrative burden for them, then the resistance that has been building may very well die down.
I would guess that in two years’ time, if FATCA is implemented as intended, that it will almost impossible for a US citizen to open any bank account at all at a European bank. I think that this is the real, underscoring purpose behind FATCA – They couldn’t care less that we can’t access financial services, because they know that that means that we’ll have to use US subsidiaries in other countries since they will be the only options open to us. I will have my money under my mattress before I put my money within such easy grasp of the IRS personally!
As others have pointed out as well, the new idea to report through country’s governments is a sham since data protection laws are still being bypassed. The one advantage is that if you are chum chum with the right people in high places I imagine that you could get your details struck off the list before it is forwarded to the IRS like others have mentioned.
Still hoping to see the day when FATCA is repealed. We know that Obama obviously won’t be repealing this, have any of the Republicans said that they would? Is everyone in on it? 🙁
Great Post, zucchero!
DonPomodoro, I suspect that the majority of US lawmakers of both parties are unaware of all the implications of FATCA. As with everything else, they rarely read a whole bill before voting on it. Maybe it will dawn on them when there is a massive flight of capital out of the country.
@Don, This is my #1 scare as well. Who knows how banks around the world act over the FACTA. They could look at anyone American and say “Sorry, but we have to close your accounts.” Good luck surviving in a foreign country without a bank account!
I’m talking about REAL expats and not people who get paid from America and use a debit card to access cash. I’m talking about people who make money in the local economy and spend it in the local economy.
I don’t know if this was the US government’s intent. But given how they seem to punish people overseas, I wouldn’t be surprised if this one one of the intended consequences!
The closest thing to a Congressional challenge to FATCA type legislation aimed at US banks came from a Louisiana Congressman, Charles Boustany (Republican) in a letter to Timothy Geithner dated September 27, 2011.
The letter can be found here: http://waysandmeans.house.gov/UploadedFiles/Letter_on_NRA_taxation_final.pdf
In his letter he seems ignorant of what FATCA legislation demands of foreign banks. His main concern is the burden placed on US banks when reporting to foreign governments. His title is Chariman of the Ways and Means Subcomittee on Oversight. You’d think he’d have a clue what foreign banks think of FATCA since they’ve written hundreds of letters but no!
I’ve not been able to find any response from Geithner to this letter.
What your friend is reporting vis a vis non resident accounts is essentially current practice although the information gets forwarded through CRA before being sent to the US(Canada also does this for other countries such as Mexico whose “residents” hold non resident accounts in Canada). My belief would tend to be again as this has been current practice since the 1990s Canada would want it to stay that way and fight pretty hard for it. (Anything else by the US would look like them directly going for Canadian resident expats which despite how we talk here is something they truely want to undertake. There might be a scenario or two where non resident securities accounts in Canada might not get reported to CRA for example if they held no Canadian source stocks or bonds which(I would have to look more closely at the filing requirements for CRA NR4/NR5 foms) I suppose is something the US might want to change. There is no specific country by country reporting required by CRA for non resident accounts they just sort through the NR4/NR5(non resident equivilent to T4/T5) and forward those with payee addresses in treaty countries they exchange information with. Just as a matter of Canadian tax law the CRA views having a bank account in Canada as a sign of residential status or for businesses permanent establishment so they are somewhat rare compared to other countries such as US, Swiss, UK etc and “tricky” from a Canadian tax perspective.
I put a link below to the NR4 form. This is what CRA collects and currently gives to the US on non resident Canadian accounts. Note: There are no question of citizenship or nationality just the country of resident of the payee.
http://www.cra-arc.gc.ca/E/pbg/tf/nr4/nr4flat-11b.pdf